Amgen will have the opportunity to go before the U.S. Supreme Court to challenge a class action lawsuit in which investors allege that the company misled them about safety questions involving two anemia drugs–Aranesp and Epogen.
Fox Business reports that the original lawsuit alleges that the misrepresentations took place between April of 2004 until May 10, 2007, when a Food and Drug Administration panel expressed their concerns about the drugs, recommending new limits on patient use. As a result, the company’s shares dropped by more than 9 percent.
The Supreme Court hearing was awarded so that Amgen can seek to overturn a court ruling by U.S. District Judge Philip Gutierrez in Los Angeles, as well as the 9th Circuit, which certified a group of investors for a class-action lawsuit against the drug company.
Courthouse News reports that Amgen hid the true nature of the FDA’s concerns, and that they concealed a clinical trial which showed exacerbated tumor growth in patients. In the 9th Circuit’s affirmation, they defined the presumption by stating:
“The principle that the market price of a security traded in an efficient market reflects all public information and therefore that a buyer of the security is presumed to have relied on the truthfulness of that information in purchasing the security.”
Business Week reports that a group of law professors and former Securities and Exchange Commission members said in a brief supporting Amgen’s bid for a Supreme Court hearing that:
“Securities class actions are almost always settled once a class is certified, because the risks to a defendant of going to trial are so substantial.”
Judge Barry Silverman wrote for the unanimous, three-judge panel in Pasadena, stated according to Courthouse News that:
“Plaintiffs need not prove materiality to avail themselves of the fraud-on-the-market presumption of reliance at the class certification stage. They need only allege materiality with sufficient plausibility.”
He added that the class, “plausibly alleged that several of the defendants’ public statements about Amgen’s pharmaceutical products were false and material.” Finally, Silverman wrote:
“Coupled with the concession that Amgen’s stock traded in an efficient market, this was sufficient to invoke the fraud-on-the-market presumption of reliance.”